Islamic Banking – how to open an account in the UAE

According to the study conducted in 2017, Islamic banking is becoming more popular in the United Arab Emirates. More than half of the population gives preference to Islamic banking. In 2017, this indicator has exceeded the same indicator by five percent in comparison with 2015.

The main feature identified by the study is as follows – non-Muslims living in the UAE use Islamic banking services 7% more often than in the previous year. This dynamics is very encouraging and is the clear indication that an increasing number of people trust Islamic banking and are interested in opening an account in the UAE and Dubai, in particular.

This tendency suggests that the future of Islamic banking in the UAE looks very secure. Islamic banking enjoys the full support of the UAE government, in particular, from the Ruler of Dubai, Prime Minister and Vice-President of the United Arab Emirates, Mohammed bin Rashid Al Maktoum. Strengthening of Islamic banking is the important step towards the establishment of Dubai as the financial capital of the world.

Opening an account in an Islamic bank in the UAE brings convenience and comfort. The authorities regularly monitor the attitude of consumers towards Islamic banking, as well as other services provided in accordance with the Sharia law. According to the latest poll, Islamic banking enjoys the great trust of the consumers. About thirty percent of non-Muslims believe that opening an account in an Islamic bank in the UAE is the right business decision.

More than 60% of respondents know about Islamic banking and are aware of the possibility to open an account in the UAE. One of the main advantages of Islamic banking and opening an account in Dubai, the UAE, is the nonexistence of credit rate. But this feature is not the only benefit worth mentioning. The main feature of Islamic banking and the advantage of opening an account in the UAE is that it functions in accordance with the Sharia law.

If you plan to open an account in the UAE, Islamic banking is definitely worth your attention and you need to learn more about the features of its functioning. Islamic banking imposes no interest rates on credits. This is due to the Muslim laws aimed at establishing social equality. In Islam, profit is encouraged, but there are no credit interest rates since such activities neither lead to the creation of something new nor contribute to the improvement of the situation in the society as a whole.

Islamic banking and opening an account implies sharing risks. There is no credit interest rate. Under such circumstances, Islamic banks act as investors rather than lenders. This leads to the following – opening an account in the UAE and obtaining a loan the bank and the entrepreneur share the risks. According to the Sharia law, money is potential capital. They become real capital after investing.

Islamic banking excludes speculative behavior. Gambling is impossible, same as operations with derivative financial instruments. A treaty in Islam cannot be violated. This refers to the opening of an account in the UAE and Dubai, as well as conducting other operations. The parties are obliged to comply with the terms of the transaction. This significantly reduces all risks and is another important advantage of Islamic banking.

What are the main differences between Islamic banking and traditional banks? How to open a UAE account or an Islamic account in Dubai?

The main function of banks in Islamic banking and traditional banking is the same. Banks are a part of the national payment system. They work as financial intermediaries.

The main difference between Islamic banking and traditional banking is the absence of interest rates. Making profit is, by no means, condemned by Islam but the source of this profit should be an activity. Any profit obtained by an entrepreneur should be a reward for their work.

All these features must be taken into account when planning business activities in the UAE and considering an option of Islamic banking.